Correlation Between National Presto and Environmmtl Tectonic

Can any of the company-specific risk be diversified away by investing in both National Presto and Environmmtl Tectonic at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining National Presto and Environmmtl Tectonic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between National Presto Industries and Environmmtl Tectonic, you can compare the effects of market volatilities on National Presto and Environmmtl Tectonic and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in National Presto with a short position of Environmmtl Tectonic. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Presto and Environmmtl Tectonic.

Diversification Opportunities for National Presto and Environmmtl Tectonic

0.55

Correlation Coefficient

National Presto  Environmmtl Tectonic

Very weak diversification

The 3 months correlation between National and Environmmtl is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding National Presto Industries and Environmmtl Tectonic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Environmmtl Tectonic and National Presto is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on National Presto Industries are associated (or correlated) with Environmmtl Tectonic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Environmmtl Tectonic has no effect on the direction of National Presto i.e., National Presto and Environmmtl Tectonic go up and down completely randomly.

Pair Corralation between National Presto and Environmmtl Tectonic

Considering the 90-day investment horizon National Presto is expected to generate 8.43 times less return on investment than Environmmtl Tectonic. But when comparing it to its historical volatility, National Presto Industries is 4.65 times less risky than Environmmtl Tectonic. It trades about 0.2 of its potential returns per unit of risk. Environmmtl Tectonic is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  191.00  in Environmmtl Tectonic on October 22, 2024 and sell it today you would earn a total of  61.00  from holding Environmmtl Tectonic or generate 31.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

National Presto Industries  vs.  Environmmtl Tectonic

National Presto Indu

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in National Presto Industries are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, National Presto disclosed solid returns over the last few months and may actually be approaching a breakup point.

Environmmtl Tectonic

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Environmmtl Tectonic are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Environmmtl Tectonic exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Presto and Environmmtl Tectonic

The main advantage of trading using opposite National Presto and Environmmtl Tectonic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Presto position performs unexpectedly, Environmmtl Tectonic can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Environmmtl Tectonic will offset losses from the drop in Environmmtl Tectonic's long position.

The idea behind National Presto Industries and Environmmtl Tectonic pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.